Getting by on a student budget

Student loans and allowances haven't kept pace with living costs in New Zealand, but the Government says students should be supporting themselves and asking for help from family.

Will Matthews has had to borrow money from his parents and sell his Xbox to pay his bills. Photo: Luke McPake

Will Matthews flicks through his inbox looking for the email every student dreads.

“I think I owe about $20,000” he says hesitantly. “Maybe a bit more.”

For the past four years, the 21-year-old has avoided looking at how much debt he’s racked up studying history and politics at the University of Auckland.

Now is his final year, Will takes a weary peek at his student loan balance.

“It’s actually $68,000 … ouch.”

Will’s student loan is a drop in the ocean of New Zealand’s total student debt. The amount has ballooned by 87 per cent since 2005 from $7.5 billion to a staggering $14.2 billion in 2014.

While debt has skyrocketed, the number of people enrolled in tertiary education has dropped. In 2014, about 420,000 signed up to study, which is 80,000 less than 2005.

Put simply, the multibillion dollar debt is a mix of interest incurring on old loans—especially from borrows living overseas—and slow repayments from people with existing debts.

According to the Education Ministry, more than 260,000 borrowers in New Zealand aren’t repaying their loans either because they have no income, their income is below the repayment threshold or because they’re still studying.

Students would like to avoid crippling debt, but most decide to borrow money in order survive to get by while studying fulltime, and some say the money that they’re allowed to borrow simply isn’t enough.

“I think it’s important that people realise that students aren’t complaining because they want a bit more cash – it’s that the support that we are getting is not enough to live on at all,” Will says.

Figures back this up, showing how students’ incomes aren’t keeping up with the basic costs of living in New Zealand.

Five years ago, a student who borrowed the maximum living costs of $163.38 a week and paid the national average rent of $113.30 for a room in a three bedroom flat, would be left with about $50 for expenses.

This year a student borrowing living costs and renting would have about $37 leftover.

“I think it’s definitely is too hard,” Will says. He’s had to borrow money from his parents and sold his Xbox to pay his bills.

“A lot of people say ‘oh you’re a student, you’re studying, you can learn to live on less money’, but I think there’s a difference between learning how to budget and what students have to go through.”

The amount a student can borrow is adjusted yearly for the Consumer Price Index, a change introduced by the National Government in 2009 after the amount had remained frozen for 12 years.

But the CPI change often doesn’t reflect the real cost of living, especially in the main centres where renting prices are peaking.

Trade Me property data shows over the past five years the median rent across New Zealand has risen 23 per cent from $340 to $420 - a record which was first reached in January of this year. In the same period, student loan living costs have gone up just 8.3 per cent from $163.38 to $176.86.

What students have left after paying rent differs depending on where they choose to study.

In Dunedin, those borrowing living costs and renting a room in a three bedroom flat will have about have $50 left over. In Wellington they’ll have $17 and in Christchurch just over $10.

The picture in Auckland, where rent prices have gone up 25 per cent over the past five years, is particularly grim. After paying an average rent of $183, most students will have a deficit of at least $6.40.

Photo: Graph: Mava Moayyed

This means students are having to work longer hours alongside studying to keep up with the costs of rent, bills and food.

According to a 2014 NZUSA Tertiary Student Survey, most full-time students work an average of 17 hours a week – up from 15 hours in 2010.

Will has worked odd jobs and hours throughout this degree, but this year he bumped up his workload to 20 hours a week at the university’s student association to help pay off his credit card and bank overdraft.

The NZUSA survey also found 25 per cent of students have at least one overdraft and 28 per cent have credit card debt on top of their debt to the Government.

“If you want people to achieve highly and study hard and get good jobs to contribute to New Zealand when they graduate, people can’t do that when they have to work a lot of hours every week,” he says.

Besides the 54 per cent of students who borrow from the Government to meet their living costs, there are those who qualify for student allowance—a weekly payment they don’t have to pay back.

The maximum student allowance payment for under 24-year-olds living away from home has gone up just 6.6 per cent from $161.76 to $175.10 over the past five years.

Students who qualify for the allowance are often eligible for about $40 accommodation supplement too, but the number of students who qualify have been falling with the Government introducing tighter restrictions on eligibility.

The highest profile cuts occurred in 2012, when the Government removed eligibility for all postgraduate students regardless of income.

Joyce told a select committee last month that he was “proud” of the cuts the Government had made to student allowance eligibility since 2008.

Labour Party education spokesperson Chris Hipkins says the cuts were a terrible move.

“What we’ve seen under the current Government is that it’s become more expensive to do tertiary study and it’s more difficult to access financial support. I think there is a whole generation now who are being severely disadvantaged,” he says.

In the same meeting, Hipkins asked the minister what he thought about the fact students receives less weekly support than people on the unemployment benefit. Joyce said he thought it was “fair”.

Despite repeated requests, Joyce was not available for an interview but did provide a statement saying: “Student support for living costs is designed to contribute to, but not cover the costs of living while studying.”

This is because the New Zealand student support system is based on the idea that students and their families should make a contribution to their studies because of the significant benefit an individual gains from tertiary education, Joyce says.

As well as introducing the CPI adjustment process, the National Government made a one-off increase in the living cost payment in 2009 from $150 to $160.24 after it had remained unchanged for over a decade.

“The amount available for student loan living costs reflects a balance that needs to be maintained between access for students to tertiary study and affordability for taxpayers,” he says.

Rory McCourt says the $176.86 a student can borrow each week isn’t enough to live on, especially in cities like Auckland and Wellington. Photo: Mava Moayyed/The Wireless

NZUSA national president Rory McCourt says Joyce’s comments are shocking.

“Mr Joyce thinks it’s fair that someone on the dole without children, without commitments, should get more support than a typical student working to better themselves. Most Kiwis would find that situation deeply wrong.”

The measures the Government has introduced to reduce the costs of the tertiary sector, like drops in funding to universities and polytechs and strict limits to student allowance eligibility, are causing students to suffer long-term, McCourt says.

“It’s putting a lot of students behind in doing things like buying houses or starting businesses.”

“I think it’s certainly harder to be a student than it was in our parents’ generation. I think it’s much worse to be a student today than it was thirty or forty years ago.”

McCourt says the idea that it’s fair for students to live in a degree of poverty because they’ll go on to earn money when they graduate, exposes the troubling attitude of the government towards its student population.

“I think it sends a really corrosive message to the next generation that actually your country doesn’t value you. This country does not care for you. This country will not ensure that you’ve got opportunity. So are we surprised when students head overseas, when students say, ‘actually, this country has done nothing for me?’”

WHAT IT COSTS TO BE A STUDENT

Photo: Unknown

NICOLETTE ESPOSITO, 24, WELLINGTON

Victoria University of Wellington, 3rd year student in sociology and media studies.

Loan: Currently $30,000 and will be about $40,000 when she finishes.

Government support: Gets $249 a week in student allowance since she is 24 years old.

Income: $89 each week for 8 hours work in retail after tax and student loan deductions.

Rent: $180.

Expenses: $120 a week for power, food, and daily costs.

“I think I’m really, really lucky because I’m not struggling as much as other people I know but it makes me sick thinking about how much my loan is.”

“Part of me feels like we all have them and we make it work somehow, but I really want to own a house one day. How am I going to do that and pay off my loan at the same time?”

“In my very first year, I studied Monday to Thursday and worked Friday to Sunday and so I never had a day off. It sucked and it was hard, but I felt like it was also a valuable experience as well.”

“I think it’s important to work while you are at uni because once you graduate, you’re not going into a job completely unexperienced. But then you’ve got lecturers who say if you want to get an ‘A’ in their class, you can’t work. There is no time for you to have a job.”

“We’re paying all this money to go to uni to further educate ourselves and maybe we should be focusing all our energy on that? There’s nothing wrong with a bit of a struggle, but everyone has the right to achieve the best they can. Maybe a little bit more money would be helpful.”

Photo: Unknown

WILL MATTHEWS, 21, AUCKLAND

University of Auckland, 4th year student in politics and history.

Loan: $68,000.

Other debt: $1,000 bank overdraft.

Government support: Borrows $176.86 a week in living costs.

Income: $290 a week for 20 hours of work.

Rent: $125 in Mt Albert.

Expenses: $130 a week for food, power, transport and hot water.

“It’s been really, really difficult to hard to balance the 20 hours and studying. If you want people to achieve highly and study hard and get good jobs to contribute to New Zealand when they graduate, people can’t do that when they have to work a lot of hours every week.”

“Without working, I don’t have enough to pay my expenses. There have definitely been weeks where I just haven’t had enough. I sold my Xbox once to pay my bills.”

“I had a $500 credit card which I paid off this year and I have the tertiary account overdraft. It usually hovers between $500 and $1000 over drafted.”

“I think it definitely is too hard. A lot of people say ‘oh you’re a student, you’re studying, you can learns to live on less money’, but I think there’s a difference between learning how to budget, learning not to spend extravagantly, and what students have to go through.

“I think students aren’t being given the most basic support that they need. It’s not just everyone wants more money, it’s that there’s not enough support.”

Photo: Unknown

ANNALISE NELSON, 20, CHRISTCHURCH

National Academy of Singing and Dramatic Art, 3rd year student in performing arts.

Loan: $40,000 and will be $52,000 when she finishes.

Government support: Borrows $176.86 a week in living costs.

Income: $30 a week from parents and $60 a week for about 4 hours of part-time work.

Rent: $172 expenses included.

“In the holidays I work a lot and try to save up, but of course that whittles away quickly.”

“It’s horrible. There are times when you want to go to the movies but there's nothing there to pay for it. It’s hard for a social life there's not much you can do at all.”

“Sometimes there’s no food in the flat because we don’t have enough money to afford to get things for lunches. When it comes to lunches you’ve got to have extra money to buy stuff.”

“My course is very physical and I need a lot of dance gear. If it gets worn out, it’s an extra cost that I can’t afford.”

“I can’t afford vegetables and fruit, especially in winter, and some days I get very tired. Sometimes I don’t have food for breakfast so I don’t eat until lunchtime and it’s very impacting because the course is so demanding.”

“There are days when you get home really drained because you haven’t eaten very well at all.”

Photo: Unknown

KARLIE WILLIS, 21, PALMERSTON NORTH

Massey University, 4th year student in Bachelor of Social Work.

Loan: Currently $40,000 and will be $50,000 when she finishes.

Other debt: $2,000 bank overdraft.

Government support: Borrows $176.86 a week in living costs.

Income: Works 3 part time jobs and averages $100 a week income but can only work when not on placement for study.

Rent: $130 a week rent which includes power and internet.

“Once I pay rent, it only leaves $46 for my food, car and other bits and bobs. The problem is that I have to have a car because of my work and my placement is usually on the other side of town and I don’t feel safe biking or busing late at night when I finish.”

“When I’m not on placement and can work, I can meet my needs but when I’m on placement, it’s hard especially as I have low iron and need to buy meat which is expensive.”

“My flatmate’s mum does her groceries so she susses our dinners a lot. If it wasn’t for that I’m not sure how I’d survive sometimes.”

“Luckily, because I pick up extra money over summer, I’ve managed to build savings for when I can’t work but it is still hard.”

“There’s a few times a year when you wonder why you’re studying, but I suppose what doesn’t kill you makes you stronger.”

“My social life can take a hit, with working so much and studying. It's definitely not as extravagant as some students.”

Photo: Unknown

EVANGELINE BENGER, 20, DUNEDIN

University of Otago, 3rd year student in psychology and sociology.

Loan: Currently $40,000 and will $50,000 when she finishes.

Government support: Borrows $176.86 a week in living costs.

Income: $150 from 10 hours of work each week.

Rent: $129.

Expenses: $65 for food, power and daily costs.

“If I wasn’t working, I’m not confident that I’d have enough money to get by.”

“My flatmates and I have a relatively expensive flat in Dunedin, but even then it’s still cold and damp and that’s why our power costs are so expensive.”

“When it gets busy at university, working 10 hours can be difficult. I don’t really like making the sacrifice of missing a shift and losing out on the money but also I am here to study so I want to do well.”

“I don’t have an overdraft anymore because I hate the idea of having money that’s not really there. After my first year I had to use my course related costs to pay off my overdraft.”

“I go through phases of stressing about how much my student loan is, but at the same time there’s nothing I can do about it now. I’m just going to have to grit my teeth and bear it and hopefully end up job that can pay it off.”

“In Dunedin, it’s definitely doable to get by on the money you can borrow from the Government, but for most of my friends in Wellington, it’s really difficult.”

“I think it’s about having a good system for managing your funds so you know how much you can and can’t spend.”